Singular Centralized Banking

In the United States, the largest sector of the economy is banking. Many eyes were opened after the bailout of 2008 when taxpayers' funds were routed to failing banks who in turn used a strong percentage of the funds as inflated bonuses for chief executives, purchases of more bank buildings, and other purchases/investments that were neither helpful to the economy or what they said the funds would be used for when receiving them. It's hard to look at this behavior and feel secure about the state of the economy in the U.S. or the direction it is going.

The U.S. banking system begins with the Federal Reserve. The Fed sets the prime rate, which is the rate at which banks borrow money from the Fed. This rate ends up setting interest rates for individuals borrowing from banks. Basically, banks borrow at one rate from the Fed, then they lend to individuals at a higher rate in order to profit from the loan. One of the reasons that the 2008 housing bubble occurred was that the Fed set the prime rate at an irresponsibly low level under Alan Greenspan's libertarian philosophy, which didn't go as he thought and lenders, having less risk, gave out hordes of toxic loans to people who couldn't afford them (Holt, J.).

Banking in the U.S. originally was modest. In the late 19th century, banks were single units where people kept their gold and used different currencies (that's right- different currencies) as little symbols of the gold they had in the bank. That was the "gold standard." The U.S. didn't establish the Federal Reserve until 1914 (Rothbard, 2002) and didn't really have a recognized national currency until soon after. In the 50s, the U.S. got off the "gold standard" and made money fiat (not linked to anything). Since then, the U.S. dollar has fluctuated in value and popularity, banking has risen to the largest industry sector, and monetary lending has become perhaps the greatest weight on U.S. middle and lower class than anything else.

The proposed solution for a greater society is, I believe, a singular, centralized bank.

{This is a work in progress and is being updated}

Holt, J. (2009). A summary of the primary causes of the housing bubble and the resulting credit crisis: a non-technical paper. The Journal of Business Inquiry. 8(1) 120-129

Rothbard, M. N. (2002). A History of Money and Banking in the United States: The Colonial Era to World War II. Ludwig Von Mises Institute: Auburn, AL.

Here I will talk about all the great points why there should only be one bank-

Tax revenues off of interest

lower rates for citizens

less risky behavior and bubbles/bursts

more control over currency